Providence St. Joseph Health will acquire Bluetree, a consulting firm that specializes in managing Epic electronic health record systems, the Renton, Wash.-based integrated health system announced Thursday.
Bluetree has built a client base of more than 140 U.S. hospitals since it was founded in 2012 by former Epic System Corp. executives. The acquisition of Bluetree, which will operate under not-for-profit Providence St. Joseph as an independent for-profit subsidiary, is part the health system's pursuit of diversified revenue streams that will support patient care, executives said. Terms of the deal were not disclosed.
"We have examples of where we start something internally, but what we really liked about this is it brought us the scale right out of the gate and the ability to have a much broader, deeper way to sell our services," said Mike Butler, president of strategy and operations for Providence St. Joseph Health.
It is typically more common for health systems to grow their internal support services, like revenue cycle, group purchasing and information technology, and spin them out. Ascension, for instance, carved out its own consulting subsidiary, and Mercy Health spun out group purchasing subsidiary, ROi, which is now owned by HCA's HealthTrust. Optum on the other hand, which is owned by UnitedHealth Group, acquired the Advisory Board in 2017.
EHR integration has been a persistent pain point for providers as they pour millions of dollars into the technology and, at times, do not reap the expected results. The demand for EHR optimization has created a multibillion-dollar market, Butler said, adding that a small part of the Bluetree value proposition is to save the 51-hospital Providence St. Joseph system money on Epic upgrades by using in-house services rather than outsourced ones.
The health system set a goal of earning $1 billion in revenue in non-clinical revenue sources by 2023 to support the push for more affordable clinical care. The combination of its subsidiaries Bluetree, Epic Community Connect and Engage could be a $400 million organization, Butler said.
Community Connect allows other hospitals to use Providence St. Joseph's version of Epic, while Engage helps hospitals transition to the Meditech platform. They are a part of 23 subsidiaries that sell services to other providers.
"We are asking if they are sustainable, should they be a part of the $1 billion vision, and what would it take to optimize to get to that," Butler said. "We then prioritize them based on if we could establish a good foundation and bring in a good partner like Bluetree and what is possible in terms of the size of the market."
Providence St. Joseph also launched a for-profit population health management company in February that aims to help industry stakeholders lower costs and improve care as they adapt to a more preventive approach.